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In an Oct. 25 letter to the U.S. Securities and Exchange Commission (SEC), Ernst & Young recommended that the NYSE and the SEC seek additional input from a diverse group of assurance providers before finalizing which information would require assurance, the level of assurance and, where applicable, the transition to reasonable assurance.
In a letter to the secretary of the Securities and Exchange Commission, Vanessa Countryman, Ernst & Young provided a detailed analysis and commentary on the proposed rule change to amend the NYSE Listed Company Manual, focusing on the adoption of listing standards for Natural Asset Companies (NACs). Overall, the letter provides a comprehensive evaluation of various aspects of the proposed rule change, offering specific recommendations and considerations for the SEC's review.
Ernst & Young raises concerns about the potential conflict of interest associated with the Intrinsic Exchange Group (IEG) being significantly involved in both the development of NACs and the maintenance of the proposed reporting framework. Ernst & Young suggests that an independently governed body should transparently maintain any disclosure framework applied to NACs.
The letter raises concerns about the potential conflict of interest associated with the Intrinsic Exchange Group (IEG) being significantly involved in both the development of NACs and the maintenance of the proposed reporting framework. They suggest that an independently governed body should transparently maintain any disclosure framework applied to NACs.
It also suggests additional clarity through disclosure in the Economic Performance Report, especially regarding terms like "total economic value," which might be confused with traditional financial reporting measures.
The letter emphasizes the importance of independent third-party assurance for decision-useful information but acknowledges the potential burdensome cost for NACs, particularly those with developing revenue streams. They recommend seeking input from investors to determine whether the benefits justify the costs and propose considering a phased approach to assurance requirements to mitigate initial burdens.
They note that PCAOB-registered firms may initially lack the expertise needed for certain assurance procedures and recommend seeking input from a diverse group of assurance providers before finalizing assurance requirements.
